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July 9 Defense Industry Weekly Roundup

Posted by Fred Wellman

Defense Cuts Starting to Pinch Economy

Tim Mullaney, USA Today. The real cuts haven’t even started yet but the tightening defense budget is already affecting the nation’s economy, contrary to the many who say defense is not a true jobs creator or engine of the economy. The Bureau of Economic Analysis however would disagree, reporting that the drop of $12 billion from October through May shaved half a percentage point off first-quarter growth in the U.S. economy bringing it down from 2.4% to 1.9%. Meanwhile the National Association of Manufacturers believes the sequestration cuts could slash a million jobs including 134,000 in manufacturing. While cuts are coming, the uncertainty in Congress has made it worse than it needs to be.

U.S. Defense Cut Could Cost Billions to Implement

Andrea Shalai-Esa, Reuters. While Congress continues to fail to find a solution for their self-imposed sequestration plan of dramatic defense cuts it’s becoming clear that real savings will be an elusive goal in many ways. One example is that almost all major defense contracts have a cancelation clause that pays the contractor millions of dollars to cover their upfront R&D investments, and the costs of winding down a government project. There is reason to believe that based on the size of these cuts these penalties could very well reach into double digit billions of dollars depending on what programs get iced or outright canceled.

U.S. Firms Spending More on Lobbying

Zachary Fryer-Biggs, Defense News. It’s not terribly surprising but an analysis shows that the top five U.S. defense manufacturers have been increasing their lobbying efforts as the budget uncertainty continues in Washington. Defense News found that the top five consisting of Lockheed Martin, Boeing, General Dynamics, Raytheon and Northrop Grumman spent a combined total of $15.9 million in the first quarter, representing an 11.5% increase over the same period last year. This is the highest combined total in the four years of reporting now required by law on lobbying activities.

Pentagon Keeps Ties to Contractor That’s Under Investigation

Tom Vanden Brook, USA Today. Somewhat embattled Leonie Industries won a contract extension for its work supporting U.S. information operations efforts in Afghanistan for $60 million over the next year. USA Today has been hounding the company for some time, and seems surprised that in spite of an Inspector General’s investigation into the owners of the company and the admission that one of the founders created fake websites targeting the newspaper’s reporters, it has still maintained its contracts. The simple fact is that the firm is successfully meeting all of its contact obligations in theater and none of the investigations center on the company’s ability to execute its mission.

Post-9/11 Veteran Unemployment Rate Continues to Fall; At 9.5 Percent

Brandon Friedman, Department of Veterans Affairs. New unemployment numbers this week showed a “big dip” in veteran unemployment just one month after the same number had “skyrocketed”. The peaks and valleys in veteran unemployment numbers aren’t unexpected due to the small sample sizes the Bureau of Labor and Statistics must deal with when measuring veteran unemployment. At the VA’s Vantage Point blog, Brandon Friedman uses historical unemployment numbers to show that despite the variations in numbers month-to-month, veteran unemployment is on a downward trend. That said, unemployment for younger veterans–as it is for younger civilians–remains far too high.

The week ahead:

Tradeshows and Conferences:

Farnborough International Airshow and Tradeshow

(Mon-Sun, 9-15 July) Farnborough, United Kingdom. The Farnborough International Airshow (FIA) is the world’s most iconic global aviation event. Occupying a prominent position on the aerospace calendar, the airshow takes place every other year for one week in July. The first five days of the exhibition are traditionally trade days, followed by a weekend where the show is opened up to the public. This year’s show comes during a time of declining budgets for nations around the world and there is a certain sense of gloom going into the show from many reports. It will still promise a host of deals to be announced and opportunities in certain sectors with a heavy emphasis on unmanned systems more than ever before.

IDGA 4th Annual Military Vehicles Exhibition and Conference, (Tues-Friday, 10-13 July) Cobo Convention Center, Detroit MI. This conference bills itself as the largest stand-alone military vehicles conference in the world and it is traditionally well attended by the various military commands and many manufacturers and subcontractors in this market space. It is a challenging time for military vehicle manufacturing and the many issues surrounding current programs for the U.S. especially will be addressed including the JLTV and others.

NDIA 3rd Annual Integrated Air and Missile Defense Symposium (Wednesday, 12 July) Johns Hopkins Applied Physics Labe, Laurel MD. This event is intended to provide an audience of technical and engineering professionals, both from government and industry, with an overview of current Missile Defense Agency and Navy programs contributing to both Missile Defense and Air Defense capabilities, including discussion of path toward integration of these capabilities into Integrated Air and Missile Defense.  The forum, to be hosted by the John Hopkins Applied Physics Lab (JHU/APL) in Laurel, MD, in their Kossiakoff Conference Center, will provide an opportunity for communicating with the right audience the current MDA and Navy priorities, needs, and challenges.

Congress:   The full Congress is in session this week.

Senate:  No related mark-ups or hearings this week open to the public.

House of Representatives: 

House Veterans’ Affairs Committee – Markup (10:00 AM, Thurs, 11 July) Full committee markup of pending legislation Location: 334 Cannon House Office Building

House Energy and Commerce Committee – Hearing (10:15 AM, Weds, 11 July) Health Subcommittee hearing on “Helping Veterans with Emergency Medical Training Transition to Civilian Service,” focusing on H.R.4124, the “Veteran Medical Technician Support Act of 2012.” Witnesses: TBD Location:  2123 Rayburn House Office Building

House Homeland Security Committee – Hearing (2:00 PM, Weds, 11 July) Transportation Security Subcommittee hearing on “Has TSA (Transportation Security Administration) Met the Deadline to Provide Expedited Screening to Military Service Members?” Witnesses:  TBD Location: 311 Cannon House Office Building

House Armed Services Committee – Hearing (11:00 AM, Thurs, 12 July) Readiness Subcommittee hearing on “Department of the Air Force Aircraft Force Structure Reductions.” Witnesses: Gov. Terry Branstad, R-Iowa; Air Force Lt. Gen. Christopher Miller, deputy chief of staff for strategic plans and programs, A8; and Air Force Maj. Gen. Timothy Lowenberg, adjutant general for Washington state, testify Location: 2212 Rayburn House Office Building

Think tanks and other news events: 

American Enterprise Institute: Cybersecurity and American power, Washington, D.C. (3:00 PM, Mon 9 Jul) Description: President Obama has called the cyber threat to the U.S. “one of the most serious economic and national security challenges we face.” The U.S. federal government is a frequent target, but the corporate world is also under siege. Experts continue to disagree on solutions. How dire is the threat posed by Chinese hackers? Can government action solve the problem, or does the solution lie with the private sector? General Keith Alexander, Director of the National Security Agency, will give the keynote address, which will be followed by a discussion among a panel of experts and practitioners. RSVP online. Participants: Paul Wolfowitz, AEI, Gen. Keith B. Alexander, National Security Agency, Jim Harper, Cato Institute, Adam Segal, Council on Foreign Relations, Jeff Snyder, Raytheon Company, Michelle Van Cleave, Homeland Security Policy Institute, George Washington University Location: American Enterprise Institute for Public Policy Research, 1150 17th Street, N.W., Washington, D.C. 20036

Government Executive: How Information Collaboration Can Drive Mission Efficiency, Arlington, VA (7:30 AM, Tue 10 Jul) Description: For federal agencies to succeed in the future, they will have to achieve better communications, information-sharing, data security and cost savings. Nowhere is this more important than at the Department of Defense (DoD), where every key mission depends on timely access to the right information. Hear how the DoD has successfully launched a major collaboration initiative, the Joint Information Environment, to improve mission efficiency. Hear key learning points, which all federal agency managers should know in the effort to improve performance across government. RSVP online. Participants: David DeVries, Deputy Chief Information Officer for Information Enterprise, Department of Defense, RADM David Simpson, Vice Director, Defense Information Systems Agency, RDML Marshall Lytle, Director, J6, US CYBER COMMAND, MG Mark Bowman, Director, Joint Staff J6 – for Command, Control, Communications, and Computers (C4) / CYBER Location: Crystal Gateway Marriott, 1700 Jefferson Davis Highway, Salon H, Arlington, VA 22202

Center for Strategic and Budgetary Assessments: Rebalancing Military Compensation: An Evidence-Based Approach, Washington, D.C. (9:00 AM, Thu 12 Jul) Description:  The Center for Strategic and Budgetary Assessments will release its latest study Rebalancing Military Compensation: An Evidence-Based Approach. This groundbreaking study presents a new approach for changing the mix of pay and benefits to optimize the military compensation system. Rather than focusing exclusively on reducing costs, the approach used in this study focuses on how to get better value from the compensation system by shifting funds from undervalued forms of compensation to more highly valued forms of compensation. The study draws on the results of a survey of more than 2,600 military personnel and dependents to develop a quantitative understanding of the types of compensation most important to service members and the possible tradeoffs between different forms of compensation. RSVP by emailing [email protected]Participants: Todd Harrison, Senior Fellow and report author, Center for Strategic and Budgetary Assessments Location: National Press Club, 529 14th St. NW, 13th Floor, Washington, D.C. 20045

Center for Strategic and International Studies: The Case for Conflict & Stabilization Operations Today, Washington, D.C. (9:00 AM, Thu 12 Jul) Description: U.S. involvement in stabilization efforts is a permanent feature of the foreign policy landscape. Every year, U.S. military and civilian personnel are sent to provide assistance in foreign conflicts without the institutional capacities they would need for success. That suggests that the U.S. government either needs to decrease the number or scale of its interventions, improve its competence at conflict prevention, or increase its capacity for stabilization and reconstruction work. This report, published on the tenth anniversary of the CSIS/Association of the U.S. Army Post-Conflict Reconstruction Commission, reviews the first two generations of stabilization and reconstruction operations (post-Cold War and post-9/11) to assess how far the United States has come in its capabilities and how far it still has to go. RSVP by emailing [email protected]. Participants: John Hamre, President and CEO, CSIS, Gen. David Barno, Ret., Lieutenant General, U.S. Army, William Zartman, Professor Emeritus, Paul H. Nitze School of Advanced International Studies, Johns Hopkins University, Robert D. Lamb, Director, Program on Crisis, Conflict, and Cooperation, CSIS, Johanna Mendelson Forman, Senior Associate, Americas Program, CSIS Location: B1 A/B Conference Room, CSIS, 1800 K St. NW, Washington, D.C. 20006

Fred Wellman with General Petraeus in Iraq

Fred Wellman, President ScoutComms, brings us his weekly review of defense industry news via The Scout Report. Fred served over twenty years as an Army officer in both aviation and public affairs. You can follow Fred on Twitter @ScoutComms.

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This entry was posted on Monday, July 09, 2012 8:54 am

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